AIG to Sell Some Latin American, European Ops to Fairfax Financial Holdings for $240 Million

By Jacquie McNish and Leslie Scism

American International Group Inc. has agreed to sell some of its Latin American and European property-and-casualty insurance operations to Fairfax Financial Holdings Ltd., according to people familiar with the matter, as the global insurer continues a campaign to narrow its focus and boost financial results.

The deal marks the latest international acquisition by the Toronto-based holding company founded in 1985 by businessman Prem Watsa, one of Canada’s most prominent investors.

Under the pact, which is expected to be announced Tuesday morning, AIG will sell commercial- and consumer-insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey, the people said. Fairfax also will assume AIG’s operating assets in Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia.

Total cash consideration is approximately $240 million, the people said. The transactions are subject to regulatory approvals.

AIG has been under pressure since last fall to improve its performance, when activist investors Carl Icahn and John Paulson called on the company to break itself into parts. AIG Chief Executive Peter Hancock resisted such a split as not in shareholders’ best interests, and has pledged a variety of alternative measures instead, including selected divestitures, cost-cutting and aggressive share buybacks.

A leading seller of insurance to multinational corporations, AIG will continue serving clients with operations in the countries that are part of the Fairfax pact through a partnership with the Canadian company, the people said. AIG, long one of the U.S.’s most global companies, will focus on investments in countries where it sees good opportunities for scale and strong growth, the people said.

Fairfax has a variety of holdings in the insurance, travel and restaurant sectors, among other investments. Mr. Watsa has been compared often with U.S. investor Warren Buffett, chairman of wide-ranging conglomerate and insurance giant Berkshire Hathaway Inc.

Fairfax, with reported total assets of $27.8 billion in 2015, has been building its property-and-casualty operations by buying assets from global insurers that are retreating from smaller markets.

In July, it agreed to acquire the South African and Botswana insurance operations from Zurich Insurance Co. Ltd., and in 2015 it acquired the Ukrainian division of QBE Management (Ireland) Ltd.

The pact with AIG will provide Fairfax with well-established businesses with experienced management teams, the people said. The deal will significantly expand Fairfax’s footprint in Latin America.

At AIG, Mr. Paulson and a lieutenant to Mr. Icahn now sit on AIG’s board. Among other streamlining moves this year, AIG in August agreed to sell its mortgage-insurance unit for about $3.4 billion to Arch Capital Group Ltd.

Write to Jacquie McNish at Jacquie.McNish@wsj.com and Leslie Scism at leslie.scism@wsj.com

Breaking the story

Jacquie McNish and Leslie Scism were ahead of competitors with the news that American International Group Inc. was soon to announce it was selling some of its Latin American and European property-and-casualty insurance operations to Fairfax Financial Holdings Ltd., according to sources. AIG has been under pressure from activist investor Carl Icahn and John Paulson since last fall to improve its performance and break itself into parts. Chief Executive Peter Hancock has resisted the split and has pledged a variety of alternative measures instead.

Timeline

October 18, 2016, 8:00

AIG to Sell Some Latin American, European Ops to Fairfax Financial Holdings for $240 Million – Sources

October 18, 2016, 8:00

AIG to Sell Some Latin American, European Ops to Fairfax Financial Holdings for $240 Million – Sources

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